The performance of Nasdaq futures was lackluster early Thursday as traders responded unfavorably to the latest updates from Tesla and Netflix.

Stock-Index Futures Trading

  • S&P 500 futures (ES00) rose by 41 points, or 0.1%, reaching 35,294.
  • Dow Jones Industrial Average futures (YM00) fell by 7 points, or 0.2%, settling at 4,590.
  • Nasdaq 100 futures (NQ00) experienced a decline of 122 points, or 0.8%, bringing the total to 15,837.

On Wednesday, the Dow Jones Industrial Average climbed by 109 points, or 0.31%, closing at 35,061. The S&P 500 increased by 11 points, or 0.24%, reaching 4,566. Meanwhile, the Nasdaq Composite gained 4 points, or 0.03%, ending at 14,358.

Investors were reminded on Thursday that even if earnings results appear promising initially, it may not be sufficient when stocks have had a rapid rise and are now trading at high valuations.

The S&P 500 and the Nasdaq Composite reached their highest levels in 15 months during the previous session, with year-to-date gains of 18.9% and 37.2% respectively. The market was buoyed by hopes of the Federal Reserve easing borrowing costs due to cooling inflation.

Tesla, which has surged by 136% in 2023 and currently boasts a price-to-projected 2023 earnings ratio of 86, and Netflix, up by 62% with a P/E ratio of 42, played significant roles in driving these gains, as per FactSet data.

Market Darlings Disappoint as Tesla and Netflix Release Lackluster Results

Shares in Tesla and Netflix took a hit on Wednesday after both companies released disappointing results. Tesla’s stock was down 4% in premarket trading, while Netflix saw an 8% decline, causing futures for the tech-focused Nasdaq 100 index to drop as well.

Deutsche Bank strategist Henry Allen commented on the underwhelming performance of both companies. He highlighted that Netflix failed to meet sales estimates and provided lower-than-expected guidance for the third quarter. Meanwhile, Tesla’s results showed a decline in profitability and a squeeze on margins.

Hargreaves Lansdown’s Head of Money and Markets, Susannah Streeter, warned that both companies could face challenges if household sentiment worsens. She explained that concerns are growing due to a slowing economy and a reduction in savings from lockdown measures. This could result in decreased spending on discretionary goods and services, particularly larger purchases such as cars and non-essential streaming accounts.

However, the stream of earnings reports continues. Before the market opens, investors will be looking out for figures from American Airlines, Johnson & Johnson, Blackstone, and more. After the market closes, Capital One, CSX, First Financial Bank, and others will release their financial results.

In addition to earnings reports, there are key U.S. economic updates scheduled for Thursday. The weekly initial jobless claims and the Philadelphia Fed manufacturing survey for June will be released at 8:30 a.m. Eastern Time. Later, at 10 a.m., the June existing home sales data and leading economic indicators will also be published.

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